This invention relates to electronic funds handling systems and more particularly to systems of this type which use cash cards.
There are at present two techniques available for electronic fund handling at the consumer level. The first of these is the conventional credit card. This technique uses the card primarily for identification. Therefore, the reliability requirements with respect to damage or accidental erasure are relatively modest. The security offered by the card in terms of loss, being stolen or counterfeiting is marginal since the security mechanisms include reference to a printed negative file or money limits requiring a telephone communication to authorize the transaction. Further communication is required on a nightly basis to a clearing house so that the eventual monthly paper statement can be prepared for the consumer who then responds by paying in one form or another. The security at the point of transaction consists primarily of a comparison of the signature on the reverse side of the card with the signature on the appropriate sales slip at the time of the transaction.
The second type of card is a debit card sometimes called an ATM card. This card is essentially an identification card so that the requirements in terms of reliability are reasonably modest. Destruction, erasure or loss may be handled by system protocol. The card is used in an on-line fashion and the identification of the person is accomplished by means of a PIN (personal identification number) associated with the person and/or the card. With such a card, unattended operation is possible by means of presently available "automatic teller machines". Transaction reporting is accomplished by means of a receipt at the time of the transaction and a monthly statement.
The use of stolen cards or the creation of counterfeit cards by technically-skilled people is relatively easy for the two above types of cards. The credit card system is easily invaded since reporting of anomalous activity involving a card may entail a significant period of time before the card's use can be stopped. For the debit card, loss can continue until preset activity or money limits are reached or until the account is depleted. Because the information contained in the magnetic stripes of the card can be extracted by technically-skilled individuals, the PIN (personal identification number) scheme of identification can be easily subverted since most standards include the PIN code scrambled in a well-known algorithm.
The further problem that exists with card systems is the cost of operation imposed by on-line communication with a central station. This cost is very significant.
These considerations have led to the concept of an updatable card in which variable information, including various cash and interest, discount and savings balances can be maintained on the card. Furthermore, variable security information may also be maintained on the card leading to the potential for both attended and unattended off-line operations. The presence of balances such as cash on the card has led to the "cash card" terminology. However, the card now becomes virtually the equivalent of money. Thus, the presence of such balances requires a much higher level of not only reliability, but also security in the card system.